THE REBULIC OF UGANDA
IN THE HIGH COURT OF UGANDA AT KAMPALA
H.C.C.S NO. 1326/2000
DFCU BANK LTD ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::DEFENDANT
Before: Lady Justice C. K. Byamugisha
The plaintiff brought this action against the Defendant claiming the following reliefs: -
2. Ug. Shs. 17,000,000/= being the cost of the renovation carried out on the property by the
3. Ug. Shs.3,430,000/ being the money paid by the Plaintiff for the registration of the transfer in his favour which transfer was eventually cancelled.
4. Ug. Shs. 117,000,000/= being the loss of bargain he suffered by reason of the failed sale.
5. Interest of 25 % p. a. on  above from the 11th May, 1999 till payment in full.
6. Interest on  above from the date of filing the suit till payment in full.
7. General Damages.
8. Costs of the suit.
On the 3rd May, 1999, the Defendant placed an advertisement [Exhibit P.11 in one of the local daily newspapers-The New Vision for the sale of the suit property. The said advert was by Express Factors Ltd, Court Bailiffs, Auctioneers, Debt Collectors and Commission Agents. It was stated in the advert that the Defendant was selling the property as a mortgagee and
2that it’s customer the registered owner has voluntarily consented to the sell of the said property. The date of sale was stated to be 11th May, 1999.The auction was duly held and the Plaintiff emerged the highest bidder offering Shs. 92,000,000fr which he paid with two cheques. A sale agreement [Exhibit P.3lwas signed between the Plaintiff as purchaser and Express Factors Ltd as agents appointed by Gold Trust Bank before it was purchased by the current Defendant. It was provided in clause three thereof that:
proceedings and that they had applied for stay of execution. He instructed the Defendant not to pay any money to the Plaintiff until he said so. At the time of the trial of this case there was no concrete evidence that any steps were taken to appeal or stay execution. The Plaintiff did not get a refund of his money- hence this suit.
At the scheduling conference held before the trial, the following were the agreed facts:
2. The auction was duly held and the Plaintiff was the highest bidder at Ug. Shs.92,000,000/. A sale agreement between the Plaintiff and the Defendant was executed on the May, 1999.
4. The plaintiff could not register the transfer because of a caveat on the suit property registered by Victor Kobel the Mortgagor. The Plaintiff advised the Defendant of this.
5. On the 8th November, 1999 Victor Kobel filed a suit in the High Court against the Defendant contesting the sale of the suit property. The Plaintiff was subsequently registered by the Defendant’s lawyers as the registered proprietor of the suit property subject to the caveat which was lodged by Kobel.
6. On 26t1i July 2000 the court ruled that the sale was no sale and it reinstated the parties to status quo. The Plaintiff’s registration was reversed.
7. On 8th August 2000 the Plaintiff demanded a refund of the purchase price and other reliefs.
8. Prior to the events stated above, on the 18th March 1996 the Defendant and Bank of Uganda entered into a loan agreement for an advance by Bank of Uganda to the Defendant of Ug. Shs. 80,000,000/= to refinance the monies the Defendant had lent to Nagongera Mills Ltd , the principal debtor [a copy of the loan agreement was marked as Exhibit P.17)
9. The loan was serviced by the Defendant and finally paid on the 21st June, 1999 - a copy of the statement was marked as Exhibit P.18.
10. Payment by the Defendant to Bank of Uganda is evidenced by a batch of letters and these were marked as Exhibit D.1
2. Whether the Plaintiff is entitled to the refund of the purchase price.
3. Whether the Plaintiff is entitled to the other reliefs.
The testimony of Kasozi more or less tallied with the facts as outlined at the beginning of this Judgement and the agreed facts and therefore it not necessary to reproduce it. The testimony of Apire was that Bank of Uganda lends money to banking institutions and not their customers. He also stated that it was the responsibility of the Defendant Bank to repay back the loan. The last witness was David Byokusheka a chartered surveyor who testified that on the August, 2001, he visited the suit property. He inspected it, evaluated it and compiled a report [Exhibit P.31]
The Defendant on its part called one witness Willie Ogule. The gist of his testimony was that in May last year the Defendant bought Gold Trust Bank from the original owners the Alam family. He stated that one of the terms of the agreement was that the Alam family would be responsible for the conduct of all legal cases that were in progress for a period of six months. He further stated the responsibility of the Defendant was to cooperate with the Alam family in the conduct of litigation. On the matter now before court, the witness stated that Nagongera Millers Ltd whose managing director was Victor Kobel sued the bank and obtained judgement in which the court ordered the cancellation of the Plaintiff’s name from the certificate of title which was the subject of property sold by public auction to the Plaintiff. He stated that he came in contact with the case at that point. He further stated that he wrote to the Alam family [Exhibit P.15] asking them whether it had any objection to its account being debited with the amount which was being claimed by the Plaintiff. The family wrote back instructing the Defendant not to pay as it was dissatisfied with the Judgement and were preparing to appeal. The witness stated that as a bank it did not seek any remedy against the judgement because it was the responsibility of the Alam family to pursue the court case and secondly the judgement did not hold Gold Trust Bank accountable as a reason for cancellation of the title. On the agreement of sale [Exhibit P.31 the witness stated that the Defendant complied with all the conditions contained in it. In cross-examination the witness stated that the Defendant is the same as Gold Trust Bank, and there was a mere change of name. He further stated that the registration of the Plaintiff was subject to the caveat which had been lodged by Victor Kobel and the Defendant made no effort to remove it. He admitted that at no time did the Defendant give title to the Plaintiff which was not subject to some other person’s interest.
Turning to the issues as framed, the first was whether the contract of sale was valid. In order for a contract to be valid and enforceable the following prerequisites must exist:-
(b) Intention to contract;
(c) Consensus ad idem;
(d) Valuable consideration;
(e)Legality of purpose;
(f) Sufficient certainty of terms.
Once a contract is valid, it creates reciprocal rights and obligations between the parties to it. I think it is the law that when a document containing contractual terms is signed, then in absence of fraud, or misrepresentation the party signing it, is bound by it’s terms. This is in line with the provisions of section 91 of the Evidence Act which provides that: -
(a) Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto, such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law;”
Counsel for the Defendant also submitted that the agreement of sale did not indicate who drew it. He stated that this offends section 66 of the Advocates Act. He referred to some authorities to support his submissions. I agree with counsel for the defendant that the agreement of sale does not state who drew it. Section 65 of the Act requires that any person who draws up any document relating to moveable or immovable property and is not an Advocate with a valid practicing certificate unless he/she proves that the act was not done for, or in expectation of any fee, gain or reward is guilty of an offence. There is no doubt in my mind that the sale agreement is a document relating to immovable property and it should have been endorsed in accordance with the provisions of Section 66 above. The Plaintiff testified that he is the one who drew up the agreement. I consider the plaintiff’s failure to endorse the agreement as a technicality which should not be used to defeat the ends of justice. Moreover the Agreement was not presented anywhere for registration. I find on the evidence before me that there was an offer to enter into legal relationship on definite terms and that offer was accepted by the person who was offered the terms, therefore a valid contract was made. The first issue will be answered in the affirmative.
As regards the second issue of whether the consideration should be refunded, there is no doubt that the Plaintiff did not get what he paid for. There was specific expression as to title in the agreement. But even if there was no such an expression, a contract for the sale of land implies an agreement on the part of the vendor to make a good a title to the property he/she/it is selling.
In the matter now before court, the evidence which has been adduced and accepted by both sides is that the Plaintiff did not get a good title to the property. The property had adverse third party claims. He was registered subject to those interests. D.W.1 confirmed in his evidence in court that the Defendant made no effort to remove the caveat. In my view this was a case of total failure of consideration. Under the law the Plaintiff would be entitled to a refund of the purchase price. But the refund of the consideration is being opposed with vigour by the Defendant contending that the agreement was void and that money paid under an illegal contract is irrecoverable. He was of course relying on the judgement whose particulars are already on record. But as I stated earlier, the judgement is not relevant to the matter now in controversy. It was admitted to show that the Plaintiff lost the suit property but not to prove that the reasons given for cancellation are correct. The onus was on the Defendant to adduce such evidence on which I could also make similar findings. I cannot read a judgement and conclude that what is stated therein is true. Cases are won or lost on evidence. Furthermore the Judgement was exhibited to show that the Plaintiff lost the property. P.W.1 and D.W.1 testified to this fact. The certificate of title was also exhibited to show that the Plaintiff’s name was cancelled. No evidence was adduced before me to show that Bank of Uganda was the mortgagee of the suit property and as such its employee William Kasozi should not have participated in the auction. The Defendant is estopped from raising matters not based on pleadings and on which no evidence has been led. The Judgement was a judgement in rem as opposed to a judgement in personam. In my view the judgement did not take away the Plaintiff’s rights under the agreement. The Defendant was at liberty to insert clauses in the agreement to protect itself against such eventualities. Documentary evidence was led to show that the Defendant was ready and willing to refund the money after the judgement. It is therefore my finding that the Plaintiff is entitled to the refund of the money being claimed in the plaint. The second issue is answered in affirmative.
The last issue is whether the Plaintiff is entitled to the other reliefs being claimed in the plaint. It was agreed in clause 4 of the agreement that the vendor would indemnify the purchaser against any loss arising out of any defect in title or power of sale. An indemnity by its very nature is a collateral contract which enables the person in whose favour it is made to be compensated for any loss arising out of some default. The Plaintiff gave evidence that when he was put in possession he carried out some renovations and in the process incurred expenses. It is these expenses that he is claiming from the Defendant. He testified that the suit property was painted and he put the cost of this expense at Shs. 5.000.000/=. The Defendant did not dispute this figure and I will therefore allow it. The second expense being claimed is the cost of plumbing which he claimed and calculated at Shs. 12,000,000/=. The documentary proof adduced to prove this item was not challenged in cross-examination and I will therefore allow it. The other item claimed was the cost of the aborted registration. This was put at Shs. 3,430,000/=. I think this one will be allowed. The last claim presented was loss of bargain. While submitting on this issue counsel for the Plaintiff referred court to some authorities in support of this type of claim. He stated that where there is total to transfer the purchased property the purchaser would be awarded damages assessed as the difference between the market value of the property and the purchase price.
Counsel for the Defendant submitted that such damages are awarded against a party in default. He stated that there was no defect in the title of the vendor. He was again relying on (exhibit P. 13). I think the authorities which have been cited to me by counsel for the Plaintiff are quite persuasive and I will follow them to award the Plaintiff the sum of Shs. 118,000,000/= as damages.
Consequently judgement will be entered for the Plaintiff against the Defendant in the sum of shs. 92,000,000/ = which will carry interest at the rate of 25 % p.a. from the 11th May1999 till payment in full. He is also awarded the total sum of Ug. Shs. 138,430,000/= as various damages claimed in the plaint. The sum will carry interest at the rate of 6% p.a. from the date of judgement till payment in full. He is awarded the taxed costs of the suit.